PepsiCo testing new U.S. Diet Pepsi formulas

PaulZiobro

-- Company looking at changing sweetener blend in Diet Pepsi so it maintains taste better and longer

-- New Diet Pepsi formulas being tested with customers, could come out in early 2013

(Adds statement from PepsiCo spokeswoman in 6th paragraph and additional details on test in 9th paragraph.)

PepsiCo Inc.
PEP, -0.12%
is trying to get the Diet Pepsi you drink to taste more like the Diet Pepsi they make.

The soft-drink maker is considering replacing its U.S.-based Diet Pepsi formula with one similar to those used in some international markets, according to two independent PepsiCo bottlers. The goal is to have a Diet Pepsi formula in the U.S. that tastes closer to what the drink tastes like as soon as it is made and doesn't change as much through all the heat and jostling that cans and bottles are exposed to from production to consumption.

The issue with the U.S. Diet Pepsi formula is that the lone artificial sweetener, aspartame, used in the soda breaks down and loses some of its sweetness in high temperatures, one bottler said. Too much shaking during transportation also makes the taste falter. That makes trips on the backs of delivery trucks and storage in warehouses troublesome, especially during the summer months. The end product can wind up tasting different than when it came off the production line.

"It's like handling eggs," one PepsiCo independent bottler said of shipping and storing Diet Pepsi. He declined to be named because he was prohibited from publicly discussing the plan.

Any possible change to Diet Pepsi would be limited to the composition of the sweetener blend, which the company says isn't a change to the formula.

"While we are always looking at ways to provide the best consumer experience, we have no intention of changing the Diet Pepsi formula or the great taste that our consumers know and love," PepsiCo spokeswoman Andrea Foote said.

Introducing new formulas can be tricky, as Coca-Cola Co.'s
KO, -0.26%
famous snafu releasing New Coke famously showed. In 1985, Coca-Cola changed its flagship product for the first time in 99 years and called it New Coke. But after just 79 days, Coca-Cola quickly flipped back to the original after a consumer outcry.

PepsiCo's switch isn't expected to be as dramatic since it is just trying to keep the taste steady and the name isn't changing, although the more stable formula may come across sweeter.

The company is testing a few formulas with fans of Diet Pepsi in the U.S. to see if it passes their taste tests, one bottler said.

A person familiar with the matter said that variations from Canada and Saudi Arabia were tried out in initial tests, but that PepsiCo is now looking at other formulas that use a blend of artificial sweeteners, like aspartame--more commonly known by its brand names, Equal and NutraSweet--and acesulfame potassium.

If a suitable replacement is selected, PepsiCo plans to have the new formula out in the U.S. in early 2013, the bottler said.

The potential switch comes as PepsiCo is trying to improve results in its drinks businesses in the Americas, with a particular focus on sodas. Its flagship Pepsi-Cola brand is getting an outsized focus during the turnaround, with the launch earlier this year of the first global advertising campaign to try to boost sales of the drink, which has more than $20 billion in annual sales globally.

Diet Pepsi itself could use a jolt. Its U.S. sales volume fell 8.2% in 2011, according to the trade publication Beverage Digest, more than twice as much as the 4% decline by main competitor Diet Coke and the largest decline among the 10-largest soda brands. Diet Pepsi ranked seventh on the list, while Diet Coke, which also uses only aspartame as a sweetener in the U.S., continued to hold the No. 2 spot it claimed from Pepsi-Cola in 2010.

One challenge Diet Pepsi and Diet Coke face is the introduction of other zero-calorie cola drinks by PepsiCo, with Pepsi Max, and Coca-Cola, with Coke Zero. Both use a blend of artificial sweeteners but are marketed more to males than the female-focused Diet Coke and Diet Pepsi.

PepsiCo also has another so-called mid-calorie cola, Pepsi Next, that it has introduced this year, and it uses some high-fructose corn syrup to sweeten the drink. It has 60 calories in a 12-ounce can, compared with 150 calories for regular Pepsi. Coke, meanwhile, is testing mid-calorie versions of its lemon-lime Sprite and orange Fanta sodas in a few markets.

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